Class Action Lawsuits and the CBD Industry Stability
When an entire industry is unregulated, especially an industry of this nature, and products are being made by reputable and non-reputable suppliers alike, it should be no surprise that some consumers are beginning to take issue. Whether their claims are unfounded or not, some CBD companies may be facing legal repercussions.
What are Claimants Saying
A class action lawsuit is a federal lawsuit that takes place when a group of people sue a company as a result of having had the same, or similar, grievances resulting from the same product manufactured by the defendant. In the case of CBD the claimants, those filing the lawsuit, claim that the products were either misbranded or adulterated.
The Food and Drug Administration (FDA) has not approved CBD as an ingredient in food or supplements and as a result many claimants are stating grievances as a result of “illegal CBD products.” It is also against FDA regulations to state any medicinal use of CBD or to label it as a supplement. While the FDA hasn’t placed regulations on CBD its silence is preventing most lawyers and courts from moving forward. Essentially, there needs to be some form of FDA regulation in the CBD market.
The lawsuit against Infinite CBD is specifically calling out that their CBD product ingredients and efficacy were misrepresented. Again, without proper guidance and regulation from the FDA many companies are making claims and formulating products with their own standards, the blind leading the blindif you will.
What Lawyers are Saying
Lawyers are certainly not surprised by these lawsuits, but they are hoping the lack of regulation will allow for stays to give the FDA time to provide formal regulations and guidance. The term stayssimply implies a case is placed “on ice” until further clarity is provided. In the case of CBD class action lawsuits, defendant lawyers are hoping to receive this ruling until the FDA can provide further regulatory guidance. This guidance would then give judges a greater knowledge base of how these allegedly unlawful CBD companies can comply and the extent to which they purportedly broke the law.
Some lawyers find such defendant claims regarding efficacy and ingredients to be lofty for a federal case, without having a state won case to back it up. Lawyers are guiding their clients in evaluating their own practices for potential lawsuits.
Legitimate and reputable companies that strongly believe in the value of CBD for consumers could benefit from focusing on showing the safety and efficacy of CBD for their customers. This can be done by backing adequate CBD research and making their own formulations of a high standard and quality.
What the FDA is Saying
The FDA claims they will have further guidance in the coming weeks, but as of yet they are sticking to their prior stance that CBD is not a legal dietary or supplement ingredient and advising the general public to not use CBD products.
The FDA is still actively sending warning letters to CBD companies making health claims or breaking labeling laws. There is no formal FDA determination and the courts are unable to use such statements as legal guidance.
How Should Companies Respond
It is understandable that in a rapidly booming market with little to no regulation CBD companies may begin to feel the pressure of forging ahead without guidance. They have stepped into uncharted territory and are essentially making up their standards as they go with more reputable companies depending on third party lab testing for safety and publicly funded research to back potential uses.
Some larger firms admit that lawsuits of this nature tend to increase the likelihood of being sued in the same manner. Public class action lawsuits tend to snowball and lead to similar suits, making even well-meaning companies at risk.
CBD companies without legal counsel and protection should begin seeking legal representation now in the event such a suit is lobbied against them.
Uncertainty in the Industry
It is hard to say at this time how these lawsuits will affect the industry since none of them have yet to be settled. The first few settlements will surely set the tone for potential future lawsuits. The longer the industry goes without FDA guidance the more likely they are to be challenged by consumers.
It can be said the greatest risk to the industry is uncertainty. This uncertainly is rooted in regulation. The uncertainly of how the industry will be regulated makes it difficult for many companies to know how to move forward.
CBD companies with deeper pockets are likely the greater targets. Hopefully these lawsuits can help to week out companies that do not have their customers best interest in mind and are truly putting them at risk and making false claims. These suits may even bring about greater stability and clearer vision for industry standards.
